RBD - Restaurant Brands

[Snoopy]

So Snoopy, if you invest in companies such as Restaurant Brands/KFC for their dividend (and capital gain also, but primarily for their dividend) what % dividend yield would you expect as a minimum? Or don't you work that way and instead focus on the earnings ratio?

I have more than one investing strategy ENP. RBD will not easily expand outside of the NZ market. But neither is it likely to go bust. So my strategy with regard to RBD comes under 'deep value'. Take advantage of the share price being battered down by past management follies and ride the share price back up as managment focusses back on the core home market. I am more focussed on what incremental sales RBD might get out of their national infrastructure. Competitiveness vis-a-vis the competition is important here. But keep costs under control and profits and the associated dividends (payout ratio is a matter of company policy) should naturally follow.

SNOOPY

[Snoopy]

I think that going forward from here, RBD might get 5% earnings growth on average compounding over the next eight to ten years. Considering what happened during the last Lions tour we could hit 5% in FY2011, 10% the year after and a flattening off after that.

Ananlyst Sandra Urlich put out another bullish forecast for RBD on April 28th, suggesting profits mtay jump to $24m next year. Perhaps, but that is a way north above management's $20m and a bit guidance. I am more interrested in her guidance from December 2009:

"Urlich has upgraded her forecast earnings for the year ending February 28 from $16.2 million to $18.2 million and her 2011 forecast from $17.1 million to $19.1 million."

I am interested in why she now considers her December forecast so wrong. If her forecasting technique is to take management figures and add 20%, sooner or later she will be wrong. Then watch the sharemarket investor customers squeal.

SNOOPY

[h2so4]

So some analyst is forcasting $18.2 but could jump to $24m for Y2010?????? I'd say she is covering her bottom.

[Anna Naum]

Ananlyst Sandra Urlich put out another bullish forecast for RBD on April 28th, suggesting profits mtay jump to $24m next year. Perhaps, but that is a way north above management's $20m and a bit guidance. I am more interrested in her guidance from December 2009:

"Urlich has upgraded her forecast earnings for the year ending February 28 from $16.2 million to $18.2 million and her 2011 forecast from $17.1 million to $19.1 million."

I am interested in why she now considers her December forecast so wrong. If her forecasting technique is to take management figures and add 20%, sooner or later she will be wrong. Then watch the sharemarket investor customers squeal.

SNOOPY

She had a sell on the stock until recently I was told, playing catchup

[h2so4]

Some analyst. Ha! I'd pick snoopy over her.

[Snoopy]

Some analyst. Ha! I'd pick snoopy over her.

I highlighted Urlich as an example, but the question applies equally well to almost all the published analysts. Why do they all decide RBD is a good investment, after the share price has risen significantly? Wouldn't it have been better for their share investor customers if they had got them to position themselves beforehand so that they might benefit from any share price rise?

SNOOPY

[Snoopy]

How well have I done out of RBD? I have been a shareholder since the beginning, a long 13 years ago. However most of my purchases have been more recent. The median holding time for my holding is just 4 years. In those 4 years I have received a total of 23.5cps in dividends. A ‘buy and hold’ investor buying at that time would have paid $1.30 per share. But my average purchase price is $1.02. So my purchase timing, while not optimal, has been very advantageous.

My total return has been: (1.02+0.235)(i^4)=(2.31), where ‘i’ works out at 16% compounding.

Over that same time period the NZX50 has declined from 3700 to 3300. That represents a loss of:

3700(f^4)=3300, where ‘f’ works out as 0.97. This represents a compounding loss of 3% per annum.

Putting the two together I am looking at an overall outperformance of the NZX50 by 19% compounding per year every year for four years after tax.

SNOOPY

[h2so4]

I highlighted Urlich as an example, but the question applies equally well to almost all the published analysts. Why do they all decide RBD is a good investment, after the share price has risen significantly? Wouldn't it have been better for their share investor customers if they had got them to position themselves beforehand so that they might benefit from any share price rise?

SNOOPY

Maybe at the time they had a "better growth investment " to sell share investor customers. Better for them aye.

[h2so4]

How well have I done out of RBD? I have been a shareholder since the beginning, a long 13 years ago. However most of my purchases have been more recent. The median holding time for my holding is just 4 years. In those 4 years I have received a total of 23.5cps in dividends. A ‘buy and hold’ investor buying at that time would have paid $1.30 per share. But my average purchase price is $1.02. So my purchase timing, while not optimal, has been very advantageous.

My total return has been: (1.02+0.235)(i^4)=(2.31), where ‘i’ works out at 16% compounding.

Over that same time period the NZX50 has declined from 3700 to 3300. That represents a loss of:

3700(f^4)=3300, where ‘f’ works out as 0.97. This represents a compounding loss of 3% per annum.

Putting the two together I am looking at an overall outperformance of the NZX50 by 19% compounding per year every year for four years after tax.

SNOOPY

Yup. Now do it for the next 20 years.

[ENP]

Wouldn't it have been better for their share investor customers if they had got them to position themselves beforehand so that they might benefit from any share price rise?
SNOOPY

Sorry but I had to chuckle to myself about that one.

How are they "experts" when they tell people to buy once it's gone up? Anyone can look at a graph...